Stanford Social Innovation Review

The Four Fundamental Questions of Philanthropy

ALBERT RUESGA on how to decide what to do with $600,000,000.

The Ford Foundation, the second largest foundation on the planet, with assets of $12 billion, is about to hire a new CEO.  What will the new CEO do with all that money?  How, among all the possibilities available to her, will she decide to focus the foundation’s grantmaking?

The new CEO will want to honor the foundation’s previous commitments.  She won’t want to make any sudden moves.  But having exercised the necessary prudence, and having consulted her board, toward what star will she steer her course?

Granted, if you took all the giving in one year of all the foundations in the United States—approximately $34 billion—the sum would barely equal three percent of all nonprofit operating expenses.  In fact, it wouldn’t even cover the expenses of the 70 largest nonprofit hospitals (and there are 3,000 nonprofit hospitals in the United States).* Nevertheless, with an annual grantmaking budget of $600,000,000, the new Ford Foundation CEO will be able to move the needle significantly on any number of issues.

Imagine that it fell to you, dear reader, to invest $600,000,000 each year in charitable work.  How would you do it?

I can’t imagine anybody doing this successfully without first attempting to answer the Four Fundamental Questions of Philanthropy:

1.  What are we living for? What does human flourishing look like?  What is my vision of the Good?  Is it the greatest happiness for the greatest number?  When does the Categorical Imperative trump the Greatest Happiness Principle?  Is life little more than moving things from one place to another until we die?  Is it simply a long series of credit card purchases marked by some poignant, half-remembered moments with friends and family?

2.  How do I understand (social) justice? What’s our responsibility to one another in a complex, industrial society?  How much suffering at “the bottom” should be tolerated if the overall statistics look pretty good?  Is the notion of a social contract at all coherent?  If so, who gets to shape it and how?

3.  What is the role of a foundation in society? What is the appropriate role for private (viz., foundation) capital in addressing social needs?  What’s the proper mix of public and private funding for social goods like the arts, job training programs, health care, or education?  Should foundations take up the slack when, under pressure to reduce taxes, governments cut funding for social programs?  What should be the relation between a foundation and other institutions? Between a foundation and individual citizens? 

4.  Apart from my board, the legal authorities, and God Herself (not necessarily in that order), to whom should I be accountable and in what ways? Are things getting better or worse, for whom, and how quickly?  When should a current need trump a possible future need?  How did we get into the current mess in the first place?  If “systemic” issues are involved, how far can or should we go in attempting to change the system?  Is it my foundation’s responsibility to keep the issue—whatever it is—from becoming an issue again?  To what extent should I risk great failure in an attempt to obtain a great social good?  What’s the received wisdom** I need to question?  Do I know the history of my own field well enough to say what counts as failure and what counts as success?  Do I understand what contributed to these failures and successes? 


* According to nonprofithealthcare.org.

** E.g., ‘The primary purpose of education is to prepare young people for the work force,’ ‘A nation’s health is measured by the growth of its GDP.’

Posted by Albert Ruesga

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“New” Philanthropy

PAUL SHOEMAKER asks for feedback on the potential for systemic change.

I have recently been in several meetings and conversations that centered on systemic change in the philanthropic sector.  At a Capital Ideas Symposium at Harvard last month, we explored a wide range of new, more efficient approaches to investing in effective nonprofits. In a Grantmakers for Effective Organizations listserv discussion, several funders talked about the disadvantages of restricted, project-specific funding, and argued over the merits and challenges of operational and unrestricted funding. And the Center for Effective Philanthropy recently published a report on foundation practices that sparked some vigorous reactions. I expect that the Council on Foundations conference, which is coming here to Seattle next week, will be a backdrop for all of these discussions. Among the myriad of events, I’ve been asked to facilitate a roundtable discussion on “new” philanthropy.

All this talk makes me wonder....Am I just living in an echo chamber with a narrow segment of the sector, or is something really afoot? These are some of the questions I’ve heard discussed:

• Should more grants be in the form of unrestricted or operational funding, to give nonprofits more flexibility and greater capacity?

• How can we streamline the application process, or make it more efficient across funders? (This is an age-old question, but one that has recently been addressed successfully in a few communities.)

• Funders are collaborating more, but there is still not much of a “capital market” through which effective nonprofits can scale their solutions to social problems. (Bridgespan has done some excellent work in this realm of late.)

• How can the grant acceptance and reporting processes be streamlined to save nonprofits time, and spare them the “shell games” they play to appeal to different funders?

I want to ask all of SSIR readers—nonprofit folks, funders, policy people, academics, etc:
1) Is there a genuine wave of momentum behind some of these systemic changes?

3) What do you think are the priorities?

Posted by SSIR Editor

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